The US also declared Iran's banking system a centre for money laundering, designed as a stern warning to financial institutions around the world to think twice before doing business with Tehran.

Britain's new restrictions included an order that its financial institutions cease doing business with all Iranian banks, including the central bank and extending to all branches and subsidiaries. It amounted to what was termed an unprecedented British attempt to cut off an entire country's banking industry from the UK financial sector.

The sanctions were aimed at "preventing the Iranian regime from acquiring nuclear weapons", Chancellor George Osborne said. Canada took similar actions to the US, while France urged fellow European countries and Japan to stop buying Iranian oil and to freeze any assets belonging to Iran's central bank.

US president Barack Obama said Iran had a choice: come clean on its nuclear programme and reap the benefits of closer economic co-operation with the world, or face even more pressure.

"Iran has chosen the path of international isolation," Mr Obama said. "As long as Iran continues down this dangerous path, the United States will continue to find ways, both in concert with our partners and through our own actions to isolate and increase the pressure upon the Iranian regime."

The new restrictions essentially amount to a piecemeal addition to dozens of American measures already in place to isolate Iran's economy, partly reflecting the need for a quick response to a United Nations nuclear agency report suggesting Iranian work towards the development of atomic weapons.

Release of the report two weeks ago sparked frenzied international diplomacy over how to halt the Iranian threat, including speculation in the US, Europe and Israel on the merits of military intervention.

The United Nations has passed four rounds of global sanctions against Iran since 2006, but veto-holding nations Russia and China stand in the way of any further action. And even unilaterally, American officials have held back from blanketing all of Iran's fuel-related exports and its central bank with sanctions, for fear of spiking world oil prices and hampering the American economic recovery.